■ Ulrich Brixner was a banker with experience in both German and
international banking. He was the first chairman of the board of directors
of Deutsche Zentral-Genossenschaftsbank (DZ Bank). His successful career
reflected both a deep understanding of the intricacies of the banking
industry and a need for solid control of operations.

RISE IN GERMAN BANKING

Brixner gained prominence in the credit and cooperative banks of Germany.
By 1991 he had been helped into a position of authority by Bernd Thiemann;
Brixner was heading Genossenschaftliche Zentralbank (GZ Bank), the smaller
of Germany's two credit bank cooperatives—the other being
Deutsche Genossenschaftsbank (DG Bank). Thiemann was then chairman of
Nord/LB (a German financial institution) while Brixner headed its smaller
competitor GZ Bank. In that year Brixner declined an opportunity to merge
with the larger of Germany's credit banks, DG Bank, which named
Thiemann to be its chairman. The two men became rivals in a relationship
that would come to a head 10 years later.

Under Brixner's leadership GZ Bank came to include not only three
of Germany's major credit banks (Genossenschaftliche Zentralbank in
Stuttgart, Sudwestdeutsche Genossenschafts-Zentralbank in Frankfurt, and
Westdeutsche Genossenschafts-Zentralbank in Düsseldorf) but also
the largest of the German building societies and several mortgage banks,
investment companies, leasing and manufacturing companies, and a large
insurance group.

EXPANSION INTO NON-GERMAN BANKING MARKETS

As Germany took a prominent role in the economic development of the
European Union, German companies expanded across the continent; the more
aggressive German banks followed these firms into new markets. Brixner and
GZ Bank, meanwhile, looked even farther abroad. In November 1995 GZ Bank
opened an office in Singapore with plans to convert the outlet into a
merchant-banking operation by 1998. This move was made because of the
growing number of German companies in the Asia Pacific region.

MERGER OF GERMAN COOPERATIVE BANKS

In 1991 Brixner and GZ Bank had declined merger possibilities, but during
the following years it became clear that a merger of Germany's top
cooperative banks would be beneficial. The number of cooperative banks in
Germany was somewhere between 1,700 and two thousand but had been
declining steadily. The three top banks—DG Bank, GZ Bank, and WGZ
Bank (Westdeutsche Genossenschafts-Zentral Bank)—then entered into
negotiations. The last of the three soon dropped out; DG Bank and GZ Bank
continued talking in a painful public process until the formal merger was
completed in September 2001. DG Bank was the larger of the two, but
Brixner's GZ Bank had been the better performer; in the end Brixner
overcame his rival Thiemann to become chairman of the new entity, which
was to be called Deutsche Zentral-Genossenschaftsbank (DZ Bank).

DZ Bank was the sixth-largest bank in Germany and was to manage a large
number of the country's credit unions and rural cooperatives,
mostly in Baden-Württemberg, Hessen, Rheinland-Pfalz, and Saarland.
On the one hand the new bank faced increased opportunities and markets as
a result of the combination; on the other hand management changes and job
redundancy issues were difficult obstacles that would have to
be confronted. Furthermore, Brixner found that DG Bank had brought along
significant liabilities. In an interview published by the
Banker
on March 1, 2002, Brixner said that DG Bank had made loans that were
economically unsupportable; GZ Bank had followed an extremely conservative
loan policy and had not faced the same problem.

In the months following the completion of the merger Brixner was able to
secure greater control by reducing the number of DG Bank representatives
in positions of authority. In January 2002 the announcement was made that
three ex-DG executives would be leaving the governing board. The board
comprised only 10 members altogether, five of which, including Brixner,
had come from GZ.

DZ BANK GAINS SOLID FOOTING

In a 2002 interview with the
Banker
, Brixner stated that in addition to the expected problems of merging two
organizations—and of dealing with DG Bank's large number of
failed debtors—another immediate problem was the poor economic
situation that followed the terrorist attacks of September 11, 2001, in
the United States. Redundancies approached one thousand jobs, but
duplication was finally eliminated. DZ Bank also cut material costs in its
general reduction of expenditures and liabilities.

Brixner moved to increase company income by applying GZ Bank's
conservative loan policies and moving aggressively to recover the faulty
loans. He hoped to decrease DZ Bank's cost-to-income ratio from
over 70 percent to 60 percent. Brixner and DZ Bank also planned to expand
into an increasing number of national and international markets, which
would bring the company into direct competition with Deutsche Bank and
other large banks. He stated that increased competitiveness in retail and
other noncooperative bank sectors would be necessary because of the
decreasing number of cooperative banks controlled by DZ.

By June 2004 DZ Bank had become both a central bank and a commercial bank
and was one of the world's eight largest cooperative banks. It had
branches, subsidiaries, and representative offices all over the world.
Brixner remained unconvinced by skeptical criticism regarding his firm. He
applied the same focused, conservative attention to DZ Bank as he had to
GZ Bank, and he expected to enjoy similarly positive results. His optimism
was based on logical business methodology.